Cardiff Lexington Corp
For the period ended Dec 31, 2025. Filed Mar 10, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 10, 2026
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-03-14.
0001683168-25-001610
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-10.
0001683168-26-001639
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 84 previous paragraphs and 107 current paragraphs.
48 unchanged; 33 reworded; 25 added; 1 removed; 2 previous and 1 current paragraphs rearranged.
Tables are not compared: 13 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (25)
Current report
Our company is a targeted healthcare holding company dedicated to acquiring and building middle-market niche healthcare clinics, primarily in orthopedics, spine care, and pain management. Our partnership-driven culture emphasizes service excellence, teamwork, accountability, and performance.
Current report
We are focused on the acquisition of orthopedic and related modality practices with strong organic growth plans that are materially cash generative to maximize value and providing greater coverage for our patients, and diversification and risk mitigation for our stockholders.
Current report
Recent Developments
Current report
Bridge Loan
Current report
In December 2025 and January 2026, we entered into loan agreements with two accredited investors, pursuant to which we issued to such investors (i) convertible promissory notes in the aggregate principal amount of $80,000, which also provide for a second tranche of up to an additional $80,000 upon the mutual agreement of the parties, all of which were issued in January 2026, (ii) warrants for the purchase of an aggregate of 73,334 shares of common stock, of which 33,334 were issued in December 2025 and 40,000 were issued in January 2026, and (iii) 36,667 shares of common stock, all of which were issued in January 2026, for total gross proceeds of $80,000 and net proceeds of approximately $269,500, all of which were received in January 2026.
Current report
These convertible promissory notes accrue interest at a rate of twelve percent (12%) per annum, payable in shares of common stock, cash or a combination thereof at our option quarterly commencing on April 1, 2026, with all principal and accrued interest being due and payable five (5) years after issuance. If a quarterly interest payment is paid in shares of common stock, then the interest rate used in connection with such issuance shall be fifteen percent (15%) per annum. We may prepay the principal and accrued interest at any time without penalty upon fifteen (15) days’ notice. In addition, if we complete a financing of at least $2.5 million, then, if requested by a holder, we must repay the remaining principal and interest from the proceeds of such financing. These convertible promissory notes are unsecured and contain customary events of default for a loan of this type. These convertible promissory notes are convertible into shares of common stock at a conversion price of $0.825 (subject to standard adjustments in the event of any stock splits, stock combinations, dividends paid in common stock, stock reclassifications or similar transactions). In addition, these convertible promissory note provide that if the closing price of our common stock on the sixth (6th) month anniversary of the issuance date is less than the conversion price then in effect, then the conversion price shall be adjusted to such lower price, and also provide that if we issue any shares of common stock, or securities convertible into common stock, at a price that is less than the conversion price then in effect, then the conversion price shall be adjusted to such lower price, subject to certain exceptions.
Current report
All of the warrants may be exercised for a period of three years at an exercise price of $9.00 (subject to standard adjustments in the event of any stock splits, stock combinations, dividends paid in common stock, stock reclassifications, mergers, consolidations, reorganizations or similar transactions) and may be exercised on a cashless basis if there is no effective registration statement covering the shares of common stock issuable upon the exercise of the warrants.
Current report
All of the convertible promissory notes and warrants contain ownership limitations, which provide that we shall not effect any conversion or exercise, and a holder shall not have the right to convert or exercise any portion of a note or a warrant, to the extent that after giving effect to the issuance of common stock upon such conversion or exercise, such holder, together with its affiliates, would beneficially own in excess of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of common stock upon such conversion or exercise. This limitation may be waived, up to a maximum of 9.99%, by a holder upon not less than sixty-one (61) days’ prior notice to us.
Current report
Conversion of Deferred Compensation
Current report
On January 29, 2026, we entered into a conversion agreement with Alex Cunningham, our Chief Executive Officer, pursuant to which deferred compensation in the amount of $2,365,242 owed to Mr. Cunningham was cancelled in exchange for 556,528 shares of common stock, of which the conversion was valued as of January 28, 2026.
Current report
On March 6, 2026, we entered into a conversion agreement with Daniel Thompson, our former Chairman of the Board, pursuant to which deferred compensation in the amount of $2,352,994 owed to Mr. Thompson was cancelled in exchange for 588,249 shares of common stock, of which the conversion was valued as of March 4, 2026.
Current report
Compensation Resolution Agreement
Current report
On March 6, 2026, we entered into a lock-up and compensation resolution agreement with Daniel Thompson, our former Chairman of the Board, to resolve outstanding accrued compensation obligations. Under the agreement, we issued an unsecured promissory note in the principal amount of $116,666.66 bearing interest at 10% annually, payable interest-only in year one and 50% principal in each of years two and three, with all amounts due within three years. The agreement also required Mr. Thompson to execute a lock-up agreement in connection with our planned public offering.
Current report
Amendment to Series N Certificate of Designation
Current report
On January 29, 2026, we filed a certificate of amendment to the certificate of designation for our series N senior convertible preferred stock with the Nevada Secretary of State’s Office to amend the certificate of designation to remove the redemption provisions, which previously provided for an optional redemption by us and a mandatory redemption at the option of the holder in certain circumstances.
Current report
Impact of Recent Developments on Stockholders’ Equity
Current report
Our capital structure changed materially after the balance-sheet date as a result of the aforementioned transactions. On a pro forma basis as of December 31, 2025, after giving effect to these transactions, our stockholders’ equity would have been approximately $6,018,864. The impact on stockholder’s equity from the bridge loan transactions was $58,934, the conversions of deferred compensation by Mr. Cunningham $2,274,587 and Mr. Thompson $2,352,994, respectively, and the removal of the redemption provisions from the series N senior convertible preferred stock was $3,802,010.
Current report
Loss on disposal of fixed assets. For the year ended December 31, 2025, we recognized a loss on disposal of fixed assets of $12,593, which resulted from the identification of certain medical equipment that was no longer functional in our medical facilities.
Current report
Operating Activities
Current report
Investing Activities
Current report
Financing Activities
Current report
In December 2025, we entered into loan agreements with two accredited investors, pursuant to which we issued to such investors (i) convertible promissory notes in the aggregate principal amount of $200,000, (ii) warrants for the purchase of an aggregate of 66,667 shares of common stock and (iii) 6,667 shares of common stock for total gross and net proceeds of $200,000. We concluded that the notes, warrants and common shares represent freestanding financial instruments issued as a single financing unit and, accordingly, allocated the total transaction proceeds to each instrument based on their relative fair values. The aggregate amount allocated to the warrants and common shares was recorded as a debt discount and is being amortized to interest expense over the contractual term of the notes. These convertible promissory notes accrue interest at a rate of twelve percent (12%) per annum, payable in shares of common stock, cash or a combination thereof at our option quarterly commencing on April 1, 2026, with all principal and accrued interest being due and payable one (1) year after issuance. We may prepay the principal and accrued interest at any time without penalty upon fifteen (15) days’ notice. These convertible promissory notes are unsecured and contain customary events of default for a loan of this type. These convertible promissory notes are convertible into shares of common stock at a conversion price of $3.00 (subject to standard adjustments in the event of any stock splits, stock combinations, dividends paid in common stock, stock reclassifications or similar transactions). As of December 31, 2025, the outstanding balance of these notes is $200,000 and they have accrued interest of $499.
Current report
All of the December 2025 warrants may be exercised for a period of three years at an exercise price of $9.00 (subject to standard adjustments in the event of any stock splits, stock combinations, dividends paid in common stock, stock reclassifications, mergers, consolidations, reorganizations or similar transactions) and may be exercised on a cashless basis if there is no effective registration statement covering the shares of common stock issuable upon the exercise of the warrants.
Current report
All of the December 2025 convertible promissory notes and warrants contain ownership limitations, which provide that we shall not effect any conversion or exercise, and a holder shall not have the right to convert or exercise any portion of a note or a warrant, to the extent that after giving effect to the issuance of common stock upon such conversion or exercise, such holder, together with its affiliates, would beneficially own in excess of 4.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of common stock upon such conversion or exercise. This limitation may be waived, up to a maximum of 9.99%, by a holder upon not less than sixty-one (61) days’ prior notice to us.
Current report
On December 21, 2025, in connection with bonuses earned by certain employees, we issued promissory notes in the aggregate principal amount of $1,085,703 (representing bonuses earned of $593,450 and $492,253 for the years ended December 31, 2025 and 2024, respectively), in lieu of cash payment, including a promissory note in the principal amount of $460,000 to Alex Cunningham, our Chairman and Chief Executive Officer, a promissory note in the principal amount of $122,550 to Matthew T. Shafer, our Chief Financial Officer, and a promissory note in the principal amount of $460,000 to Daniel Thompson, our Chairman at such time. These notes bear interest of 5% per annum and mature on June 30, 2026. The bonus expense was recognized in the period earned, and the issuance of the notes was accounted for as a non-cash financing activity.
Removed paragraphs (1)
Previous report
We are an acquisition holding company focused on locating undervalued and undercapitalized companies, primarily in the healthcare industry, and providing them capitalization and leadership to maximize the value and potential of their private enterprises while also providing diversification and risk mitigation for our stockholders. Specifically, we have and will continue to look at a diverse variety of acquisitions in the healthcare sector in terms of growth stages and capital structures and we intend to focus our portfolio of subsidiaries approximately as follows: 80% will be targeted to established profitable niche small to mid-sized healthcare companies and 20% will be targeted to second stage startups in healthcare and related financial services (emerging businesses with a strong organic growth plan that is materially cash generative).
Reworded paragraphs (33)
Previous wording
On May 31, 2021, we acquired Nova, which operates a group of regional primary specialty and ancillary care facilities throughout Florida that provide traumatic injury victims with primary care evaluations, interventional pain management, and specialty consultation services. We focus on plaintiff related care are and a highly efficient provider of EMC assessments. We provide a full range of diagnostic and surgical services for injuries and disorders of the skeletal system and associated bones, joints, tendons, muscles, ligaments, and nerves. From sports injuries, to sprains, strains, and fractures, our doctors are dedicated to helping patients return to active lifestyles.
Current wording
All current revenue is derived from Nova, which was acquired on May 31, 2021. It operates a group of regional primary specialty and ancillary care facilities across Florida and Georgia that provide traumatic injury victims with primary care evaluations, interventional pain management, and specialty consultation services, including EMC assessments. We currently primarily focus on plaintiff-related care and provide healthcare to uninsured patients. Our patients have typically been in an accident and have filed a lawsuit as a plaintiff against the defendant who is allegedly responsible for the accident as the result of negligence or another tort. We provide a full range of diagnostic and surgical services for injuries and disorders of the skeletal system and associated bones, joints, tendons, muscles, ligaments, and nerves. From sports injuries, to sprains, strains, and fractures, our doctors are dedicated to helping patients return to active lifestyles.
Previous wording
We also own a real estate company, Edge View, which we acquired on July 16, 2014. Edge View owns five (5) acres zoned medium density residential (MDR) with 12 lots already platted, six (6) acres zoned high-density residential (HDR) that can be platted in various configurations to meet current housing needs, and twelve (12) acres zoned in Lemhi County as Agriculture that is available for further annexation into the City of Salmon for development, as well as a common area for landowners to view wildlife, provide access to the Salmon River and fishing in a two (2) acre pond. Management has invested years working to develop a new and exciting housing development in Salmon, Idaho and plans to enter into a joint venture agreement with a developer for this planned concept development.
Current wording
We also own a real estate company, Edge View, which we acquired on July 16, 2014. Edge View owns five (5) acres zoned medium density residential (MDR) with 12 lots already platted, six (6) acres zoned high-density residential (HDR) that can be platted in various configurations to meet current housing needs, and twelve (12) acres zoned in Lemhi County as Agriculture that is available for further annexation into the City of Salmon for development, as well as a common area for landowners to view wildlife, provide access to the Salmon River and fishing in a two (2) acre pond. Management does not currently have any plans to develop this property and expects to eventually sell the property.
Previous wording
On November 10, 2023, we sold Platinum Tax, which was a full-service tax resolution firm located in Los Angeles, California. Through this subsidiary we provided fee-based tax resolution services to individuals and companies that have federal and state tax liabilities by assisting clients to settle outstanding tax debts. As part of the asset purchase agreement between us and the purchaser, the assets that were purchased included substantially all assets, rights, interests, and licenses, except for bank accounts in place prior to the sale, for the purchase consideration of 15% of cash collected by the purchaser within one year following the sale date.
Current wording
On November 10, 2023, we sold our financial services (tax resolution) business, Platinum Tax Defenders, or Platinum Tax, that we acquired on July 31, 2018, which was a full-service tax resolution firm located in Los Angeles, California. Through this subsidiary, we provided fee-based tax resolution services to individuals and companies that have federal and state tax liabilities by assisting clients to settle outstanding tax debts. As part of the asset purchase agreement between us and the purchaser, the assets that were purchased included substantially all assets, rights, interests, and licenses, except for bank accounts in place prior to the sale, for the purchase consideration of 15% of cash collected by the purchaser within one year following the sale date.
Previous wording
Revenue. For the years ended December 31, 2024 and 2023, all of our revenue was generated by our healthcare segment, which generates revenue through a full range of diagnostic and surgical services. Our total revenue decreased by $3,583,140, or 30.23%, to $8,270,126 for the year ended December 31, 2024 from $11,853,266 for the year ended December 31, 2023. The decrease in revenue is mainly attributable to the following factors:
Current wording
Revenue. For the years ended December 31, 2025 and 2024, all our revenue was generated by our healthcare segment, which generates revenue through a full range of diagnostic and surgical services. Our total revenue increased by $3,265,451, or 39.48%, to $11,535,577 for the year ended December 31, 2025 from $8,270,126 for the year ended December 31, 2024. Excluding the cumulative catch up reduction to revenue of $1,005,764 and the one-time change in accounting estimate of $1,650,474 (both discussed below), revenue increased by $609,213, or 5.58%. The increase in revenue is driven by an increase in both patient office visits and a shift to more complex higher-value surgical procedures performed on patients year over year. For the year ended December 31, 2025, these office visits and surgical procedures were provided to approximately 270 - 375 patients per month on average at eleven facilities, an increase over the year ended December 31, 2024, where we provided services to approximately 250 – 325 patients per month on average at twelve facilities.
Previous wording
Cost of sales. Our cost of sales consists of surgical center and laboratory fees, physician and professional fees, salaries and wages and medical supplies. Our total cost of sales increased by $281,004, or 7.89%, to $3,841,628 for the year ended December 31, 2024 from $3,560,624 for the year ended December 31, 2023. Such increase was primarily due to an increase in overall increases in healthcare costs and specifically costs related to surgical procedures performed due to technology advancements, inflation, and materials and wage increases.
Current wording
Cost of sales. Our cost of sales consists of surgical center and laboratory fees, physician and professional fees, salaries and wages and medical supplies. Our total cost of sales increased by $487,702, or 12.70%, to $4,329,330 for the year ended December 31, 2025 from $3,841,628 for the year ended December 31, 2024. As a percentage of revenue, cost of sales decreased from 46.45% for the year ended December 31, 2024 to 37.53% for the year ended December 31, 2025. Excluding the reductions to revenue of $1,650,474 and $1,005,764 noted above, as a percentage of revenue, cost of sales increased from 35.16% for the year ended December 31, 2024 to 37.53% for the year ended December 31, 2025. The increase is attributable to an increase in revenue as noted above, offset by a corresponding increase in laboratory fees and personnel-related fees.
Previous wording
Gross profit. As a result of the foregoing, our total gross profit decreased by $3,864,144, or 46.60%, to $4,428,498 for the year ended December 31, 2024 from $8,292,642 for the year ended December 31, 2023. Our total gross margin (percent of revenue) decreased from 69.96% for the year ended December 31, 2023 to 53.55% for the year ended December 31, 2024.
Current wording
Gross profit. As a result of the foregoing, our total gross profit increased by $2,777,749, or 62.72%, to $7,206,247 for the year ended December 31, 2025 from $4,428,498 for the year ended December 31, 2024. Our total gross margin (percent of revenue) increased from 53.55% for the year ended December 31, 2024 to 62.47% for the year ended December 31, 2025.
Previous wording
Depreciation expense. Our depreciation expense was $13,461, or 0.16% of revenue, for the year ended December 31, 2024, as compared to $20,777, or 0.18% of revenue, for the year ended December 31, 2023. The decrease in depreciation expense was due to certain assets becoming fully depreciated during the year ended December 31, 2023.
Current wording
Depreciation expense. Our depreciation expense was $5,652, or 0.05% of revenue, for the year ended December 31, 2025, as compared to $13,461, or 0.16% of revenue, for the year ended December 31, 2024. The decrease is related to the loss on disposal of fixed assets described below and the related reduction of depreciation expense.
Previous wording
Share based compensation. Our share based compensation expense was $544,725, or 6.59% of revenue, for the year ended December 31, 2024, as compared to $0, for the year ended December 31, 2023. Share based compensation expense in 2024 consisted of expense related to the issuance of common stock to our board of directors, officers and employees as well as our investor relations firm for services provided.
Current wording
Share based compensation. Our share based compensation expense was $754,475, or 6.54% of revenue, for the year ended December 31, 2025, as compared to $544,725, or 6.59% of revenue, for the year ended December 31, 2024. Share based compensation expense in 2025 and 2024 consisted of expense related to the issuance of common stock to our board of directors, officers and employees, our investor relations firm and other consultants for services provided.
Previous wording
Selling, general and administrative expenses. Our selling, general and administrative expenses consist primarily of accounting, auditing, legal and public reporting expenses, personnel expenses, including employee salaries and bonuses plus related payroll taxes, advertising expenses, professional advisor fees, bad debts, rent expense, insurance and other expenses incurred in connection with general operations. Our selling, general and administrative expenses increased by $986,996, or 32.08%, to $4,063,816 for the year ended December 31, 2024 from $3,076,820 for the year ended December 31, 2023. As a percentage of revenue, our selling, general and administrative expenses were 49.14% and 25.96% for the years ended December 31, 2024 and 2023, respectively. Increases were primarily attributable to increases in salaries and wages of $714,799, bad debt expense of $133,719, legal fees of $105,152, public company, filing and investor relations fees of $106,820, and rent expense of 130,331. These increases were offset by a decrease in accounting fees of $192,900.
Current wording
Selling, general and administrative expenses. Our selling, general and administrative expenses consist primarily of accounting, auditing, legal and public reporting expenses, personnel expenses, including employee salaries and bonuses plus related payroll taxes, advertising expenses, professional advisor fees, credit losses, rent expense, insurance and other expenses incurred in connection with general operations. Our selling, general and administrative expenses increased by $1,269,125, or 31.23%, to $5,332,941 for the year ended December 31, 2025 from $4,063,816 for the year ended December 31, 2024. As a percentage of revenue, our selling, general and administrative expenses were 46.23% and 49.14% for the years ended December 31, 2025 and 2024, respectively. Increases were primarily attributable to increases of $1,017,749 in salaries, related bonuses, payroll taxes and payroll fees while headcount remained the same during each period, as well as an increase of $166,138 in professional fees during the year ended December 31, 2025.
Previous wording
Total other expense. We had $2,998,183 in total other expense, net, for the year ended December 31, 2024, as compared to other expense, net, of $2,080,131 for the year ended December 31, 2023. Other expense, net, for the year ended December 31, 2024 consisted of interest expense of $3,045,504, amortization of note payable discounts of $24,821, financing penalties and fees of $1,330 and other expense of $5,362, offset by a gain on debt refinance and forgiveness of $78,834. Other expense, net, for the year ended December 31, 2023 consisted of interest expense of $1,956,266, amortization of debt discounts of $136,518, financing penalties and fees of $53,000 and other expense of $49,795, offset by a gain on debt refinance and forgiveness of $115,448. The 55.68% increase in interest expense was primarily attributable to interest associated with the line of credit described below.
Current wording
Total other expense. We had $6,846,463 in total other expense, net, for the year ended December 31, 2025, as compared to other expense, net, of $2,998,183 for the year ended December 31, 2024. Other expense, net, for the year ended December 31, 2025 consisted of interest expense of $6,822,816, financing penalties and fees of $1,500 and other expense of $22,147. Other expense, net, for the year ended December 31, 2024 consisted of interest expense of $3,045,504, amortization of note payable discounts of $24,821, financing penalties and fees of $1,330 and other expense of $5,362, offset by a gain on debt refinance and forgiveness of $78,834. The 124.03% increase in interest expense was primarily attributable to interest associated with the line of credit described below.
Previous wording
Discontinued operations. For the year ended December 31, 2024, we recorded a loss from discontinued operations of $111,312, as compared to $86,520 for the year ended December 31, 2023.
Current wording
Discontinued operations. For the year ended December 31, 2025, we recorded a gain from discontinued operations of $238,285 and for the year ended December 31, 2024, we recorded a loss from discontinued operations of $111,312. The income from discontinued operations for the year ended December 31, 2025 is due to the final resolution and disposition of remaining claims in connection with Platinum Tax, which were reported as net liabilities from discontinued operations on the consolidated balance sheet as of December 31, 2024. The $111,312 loss from discontinued operations for the year ended December 31, 2024 is a part of the execution of a settlement reached in July 2022 with six previous owners of Red Rock, an entity that was discontinued in May 2019.
Previous wording
Net income (loss). As a result of the cumulative effect of the factors described above, our net loss was $3,302,999 for the year ended December 31, 2024, as compared to a net income of $3,028,394 for the year ended December 31, 2023, a net decrease of $6,331,393, or 209.07%.
Current wording
Net loss. As a result of the cumulative effect of the factors described above, our net loss was $5,507,592 for the year ended December 31, 2025, as compared to a net loss of $3,302,999 for the year ended December 31, 2024, a net increase of $2,204,593, or 66.75%.
Previous wording
As of December 31, 2024, we had $1,188,185 in cash. To date, we have financed our operations primarily through revenue generated from operations, sales of securities, advances from stockholders and third-parties and related party debt.
Current wording
As of December 31, 2025, we had $318,535 in cash. To date, we have financed our operations primarily through revenue generated from operations, proceeds from issuance of securities, advances from stockholders and third-parties and related party debt.
Previous wording
We believe, based on our operating plan, that current working capital and current and expected additional financing should be sufficient to fund operations and satisfy our obligations as they come due for at least one year from the financial statement issuance date. However, additional funds from new financing and/or future equity raises are required for continued operations and to execute our business plan and our strategy of acquiring additional businesses. The funds required to sustain operations range between $600,000 to $1 million and additional funds execute our business plan will depend on the size, capital structure and purchase price consideration that the seller of a target business deems acceptable in a given transaction. The amount of funds needed to execute our business plan also depends on what portion of the purchase price of a target business the seller of that business is willing to take in the form of seller notes or our equity or equity in one of our subsidiaries. Given these factors, we believe that the amount of outside additional capital necessary to execute our business plan on the low end (assuming target company sellers accept a significant portion of the purchase price in the form of seller notes or our equity or equity in one of our subsidiaries) ranges between $4 million to $8 million. If, and to the extent, that sellers are unwilling to accept a significant portion of the purchase price in seller notes and equity, then the cash required to execute our business plan could be as much as $10 million.
Current wording
We believe, based on our operating plan, that current working capital and current and expected additional financing should be sufficient to fund operations and satisfy our obligations as they come due for at least one year from the financial statement issuance date. However, additional funds from new financing and/or future equity raises are required for continued operations and to execute our business plan and our strategy of acquiring additional businesses. The funds required to sustain operations range between $600,000 to $1 million and additional funds execute our business plan will depend on the size, capital structure and purchase price consideration that the seller of a target business deems acceptable in a given transaction. The amount of funds needed to execute our business plan also depends on what portion of the purchase price of a target business the seller of that business is willing to take in the form of seller notes or our equity or equity in one of our subsidiaries. Given these factors, we believe that the amount of outside additional capital necessary to execute our business plan on the low end (assuming target company sellers accept a significant portion of the purchase price in the form of seller notes or our equity or equity in one of our subsidiaries) ranges between $5 million to $10 million. If, and to the extent, that sellers are unwilling to accept a significant portion of the purchase price in seller notes and equity, then the cash required to execute our business plan could be as much as $10 million.
Previous wording
Our net cash used in operating activities from continuing operations was $5,858,147 for the year ended December 31, 2024, as compared to $1,807,987 for the year ended December 31, 2023. The primary drivers of our net cash used in operating activities for year ended December 31, 2024 are our net loss of $3,302,999, increase of $4,545,068 in accounts receivable, and a decrease of $699,560 in accounts payable and other accrued expenses, offset by a change in estimate adjustment for the change in realization rate of $1,650,474, share based compensation of $544,725 and bad debt expense of $266,000. For the year ended December 31, 2023, our net income of $3,028,394, an increase in accrued officers’ compensation of $982,500, an increase in accrued interest of $486,165, and an increase in accounts payable and accrued expense of $341,261, offset by an increase in account receivable of $6,833,615 were the primary drivers of our net cash used in operations.
Current wording
Our net cash used in operating activities from continuing operations was $2,853,274 for the year ended December 31, 2025, as compared to $2,765,797 for the year ended December 31, 2024. The primary drivers of our net cash used in operating activities for year ended December 31, 2025 are our net loss of $5,507,592, an increase of $6,399,392 in accounts receivable, an increase in officers’ compensation of $512,769, an increase of $459,766 in accounts payable and other accrued expenses, an increase in accrued interest of $367,745 and a $238,285 gain on final resolution and dismissal of remaining liabilities and legal claim of the discontinued operations. These increases were offset by $6,421,521 in interest expense from the line of credit, $754,475 in share based compensation expense, $593,450 in bonus expense and $262,928 in credit losses. The primary drivers of our net cash used in operating activities for year ended December 31, 2024 are our net loss of $3,302,999, increase of $4,545,068 in accounts receivable, and a decrease of $699,559 in accounts payable and other accrued expenses, offset by interest included in the line of credit of $3,092,350, a change in estimate adjustment for the change in realization rate of $1,650,474, share based compensation of $544,725 and credit losses of $266,000.
Previous wording
We monitor outstanding cases as they develop through ongoing discussions with attorneys, doctors and our third-party medical billing company and additionally monitor our settlement realization rates over time. We have two primary methods of accelerating our cash settlement of our revenue and related accounts receivable. The first is through factoring our receivables, which was done in 2023, but ended prior to April 2023. The second method is through accepting lower settlement amounts during the final negotiations of the settlement, which is coordinated through our third-party medical billing company. When our third-party medical billing company is provided with a settlement amount of 49% of gross charges or greater they will accept. When presented with a lower amount we will discuss the reasons for the reduced rate and negotiate a higher rate. Shortening our negotiation timeframe will typically result in a lower settlement realization rate, but will accelerate the cash settlement of the outstanding accounts receivable. We began employing this second method in 2024, which reduced our settlement realization rate as described below. We have employed both methods from time to time to accelerate our cash settlement and may employ one or both in the future.
Current wording
We monitor outstanding patient cases as they develop through ongoing discussions with attorneys, doctors and our third-party medical billing company and additionally monitor our settlement realization rates over time. We currently have one primary method of accelerating our cash settlement of our revenue and related accounts receivable through accepting lower settlement amounts during the final negotiations of the settlement, which is coordinated through our third-party medical billing company. When our third-party medical billing company is provided with a settlement amount of 49% of gross charges or greater they will accept. When presented with a lower amount we will discuss the reasons for the reduced rate and negotiate a higher rate. Shortening our negotiation time frame will typically result in a lower settlement realization rate, but will accelerate the cash settlement of the outstanding accounts receivable. We began employing this method in 2024, which reduced our settlement realization rate as described below. We may employ this method in the future. The most recent average realization time for accounts receivable was approximately 12 to 24 months from the initial date of service. Typically, a patient will have a series of dates of service over an average of 12 to 16 months.
Previous wording
Prior to fiscal year 2024, we historically realized a 49% settlement rate from total gross billed charges. Accordingly, we had historically recognized net healthcare service revenue as 49% of gross billed amounts. During the year ended December 31, 2024, we underwent efforts to accelerate cash settlement of our accounts receivable to generate cash flow for operations. We did this by shortening our settlement negotiations with insurance companies and accepting lower settlement amounts. Additionally, during the third quarter of 2024, we completed a thorough review of our third-party billing data, including reviewing historical reports and new reporting methods as a part of our updated analysis. Based upon this review, it was determined that a 24-month lookback period should be used in the analysis of our historical settlement realization rates. As a result of the new efforts to accelerate cash settlement during the year ended December 31, 2024, we realized a 44% average settlement rate of our gross billed charges during this time frame, which were historically recorded in accounts receivable and revenue at 49% of gross billings. Accordingly, we recorded reductions to net revenue of $1,005,764 for the year ended December 31, 2024. Additionally, with the reduction in our estimate of our settlement realization rate from 49% to 44%, a $1,650,474 change in accounting estimate was taken during the third quarter of 2024 in our accounts receivable and revenue. We will continue to evaluate our estimate of our settlement realization rates in the future, which will include a monthly review of our trailing 24-month historical settlement realization rate, along with estimates of current and pending settlements through ongoing discussions with attorneys, doctors and our third-party medical billing company in order to determine its variable consideration under ASC 606 and the net transaction price. We will update our settlement realization rate estimate used in determining our accounts receivable and revenue each quarter based on this review.
Current wording
Prior to fiscal year 2024, we historically realized a 49% settlement rate from total gross billed charges. Accordingly, we had historically recognized net healthcare service revenue as 49% of gross billed amounts. During the year ended December 31, 2024, we underwent efforts to accelerate cash settlement of our accounts receivable to generate cash flow for operations. We did this by shortening settlement negotiations with insurance companies and accepting lower settlement amounts. Additionally, during 2024, we completed a thorough review of our third-party billing data, including reviewing historical reports and new reporting methods as a part of the updated analysis. Based upon this review, it was determined that a lookback period should be used in the analysis of our historical settlement realization rates. As a result of the new efforts to accelerate cash settlement, and establishing a periodic lookback analysis, during the year ended December 31, 2024, we realized a 44% average settlement rate of our gross billed charges during this time frame, which were historically recorded in revenue at 49% of gross billings. We continue to periodically evaluate this estimated settlement realization rate in accordance with ASC 606. This includes a monthly review of our historical data and settlement realization rates, along with estimates of current and pending settlements through ongoing discussions with attorneys, doctors and third-party medical billing company in order to determine the variable consideration under ASC 606 and the net transaction price. During 2025, we continued expanding the historical lookback period to 36 months based on the ongoing expanding data history and the timeframe in which collections have recently been occurring. We update the settlement realization rate estimate used in determining revenue periodically based on these reviews. As of December 31, 2025, the settlement realization rate at which revenue is recorded was at 41%.
Previous wording
Our net cash provided by financing activities was $6,068,077 for the year ended December 31, 2024, as compared to $2,369,325 for the year ended December 31, 2023. Net cash provided by financing activities for the year ended December 31, 2024 consisted of net proceeds from the line of credit of $6,525,892, offset by $125,000 paid on a note payable, the payment of $120,997 to a director, $105,079 paid on convertible notes payable, $100,000 in dividend payments and $6,739 in payments on the Small Business Administration loan described below. Net cash provided by financing activities for the year ended December 31, 2023 consisted of net proceeds from the line of credit of $2,125,145 and proceeds from convertible notes payable of $421,375, offset by repayment of convertible notes payable of $175,000 and repayments to directors and officers of $2,195.
Current wording
Our net cash provided by financing activities was $1,983,624 for the year ended December 31, 2025, as compared to $2,975,727 for the year ended December 31, 2024. Net cash provided by financing activities for the year ended December 31, 2025 consisted of net proceeds from the line of credit of $2,142,396 and net proceeds from convertible notes payable of $200,000, offset by $300,000 paid on a note payable, $50,000 in dividend payments and $8,772 in payments on the Small Business Administration loan described below. Net cash provided by financing activities for the year ended December 31, 2024 consisted of net proceeds from the line of credit of $3,433,542, offset by $125,000 paid on a note payable, the payment of $120,997 to a director, $105,079 paid on convertible notes payable, $100,000 in dividend payments and $6,739 in payments on the Small Business Administration loan described below.
Previous wording
As of December 31, 2024, we had convertible debt outstanding net of amortized debt discount of $105,000. During the year ended December 31, 2024, we made $105,080 in principal payments and paid the total outstanding accrued interest on these notes in the amount of $22,781. We also paid $100,000 of accrued interest to a convertible noteholder. Also, during the year ended December 31, 2024, we converted $680 in accrued interest and $1,000 in conversion cost into 1,222 shares of common stock. We recognized $1,679 of additional paid-in capital to adjust fair value for the debt settlement during the year ended December 31, 2024.
Current wording
As of December 31, 2025, we had convertible debt outstanding net of amortized debt discount of $118,295. During the year ended December 31, 2025, we received $200,000 in proceeds from convertible notes and no interest was repaid, we converted $154,049 in principal and accrued interest and $1,500 in conversion cost into 64,165 shares of common stock and recognized $145,871 of additional paid-in capital to adjust the fair value for the debt settlement during the year ended December 31, 2025. Debt discounts associated with the convertible debt at December 31, 2025 were $131,705.
Previous wording
On January 24, 2017, we issued a convertible promissory note in the principal amount of $80,000 for services rendered, which matured on January 24, 2018. This note is currently in default and accrues interest at a default interest rate of 20% per annum. On March 30, 2023, we executed an additional tranche under this note in the principal amount of $25,000. This note is currently in default and accrues interest at a default interest rate of 20% per annum. On August 11, 2023, we executed an additional tranche under this note in the principal amount of $25,000. This note accrues interest at a rate of 15% per annum.
Current wording
On January 24, 2017, we issued a convertible promissory note in the principal amount of $80,000 for services rendered, the remaining balance of which was converted into common stock on August 26, 2025. On March 30, 2023, we executed an additional tranche under this note in the principal amount of $25,000. This note is currently in default and accrues interest at a default interest rate of 20% per annum. On August 11, 2023, we executed an additional tranche under this note in the principal amount of $25,000. This note accrues interest at a rate of 15% per annum. As of December 31, 2025, the outstanding balance of these notes is $50,000 and they have accrued interest of $23,370.
Previous wording
This transaction was accounted for as a debt extinguishment and a gain on settlement of $78,834 was recorded to the consolidated statement of operations for the year ended December 31, 2024, in accordance with FASB Topic 470Borrower’s Accounting for Debt Modifications. During the year ended December 31, 2024, we paid $125,000 against the outstanding principal balance. At December 31, 2024, the remaining principal balance was $410,000.
Current wording
This transaction was accounted for as a debt extinguishment and a gain on settlement of $78,834 was recorded to the consolidated statement of operations for the year ended December 31, 2024, in accordance with FASB Topic 470Borrower’s Accounting for Debt Modifications. During the year ended December 31, 2025, we paid $300,000 against the outstanding principal balance. At December 31, 2025, the remaining principal balance was $110,000.
Previous wording
On March 12, 2009, we issued a debenture in the principal amount of $20,000. The debenture bore interest at 12% per year and matured on September 12, 2009. The balance of the debenture was $10,989 at December 31, 2024 and the accrued interest was $8,869. We assigned all of our receivables from consumer activations of the rewards program as collateral on this debenture.
Current wording
On March 12, 2009, we issued a debenture in the principal amount of $20,000. The debenture bore interest at 12% per year and matured on September 12, 2009. The balance of the debenture was $10,989 at December 31, 2025 and the accrued interest was $10,188. We assigned all of our receivables from consumer activations of the rewards program as collateral on this debenture.
Previous wording
On June 2, 2020, we obtained a loan from the Small Business Administration of $150,000 at an interest rate of 3.75% with a maturity date of June 2, 2050. The principal balance and accrued interest at December 31, 2024 was $142,916 and $0, respectively.
Current wording
On June 2, 2020, we obtained a loan from the Small Business Administration of $150,000 at an interest rate of 3.75% with a maturity date of June 2, 2050. The principal balance and accrued interest at December 31, 2025 was $143,558 and $0, respectively.
Previous wording
On September 29, 2023, our company and Nova entered into a two-year revolving purchase and security agreement with DML HC Series, LLC, or DML, to sell, with recourse, Nova’s accounts receivables for a revolving financing up to a maximum advance amount of $4.5 million. A review is performed on a quarterly basis to assess the adequacy of the maximum amount. If mutually agreed upon by us and DML, the maximum amount may be increased. On April 24, 2024, we entered into amendment No. 1 with DML which increased the maximum advance amount to $8,000,000 and defined the discount fee equal to 2.25% per purchase and claims balance forward on new purchases with a minimum fee to now be $10,000. On June 11, 2024, we entered into amendment No. 2 with DML which further increased the maximum advance amount to $11,000,000. On December 27, 2024, we and Nova entered into amendment No. 3 with DML which further increased the maximum advance amount to $15,000,000. As of December 31, 2024, we had an outstanding balance $8,645,991 against the revolving receivable line of credit and accrued interest of $315,031. The unused line of credit balance as of December 31, 2024 was $6,354,009. The revolving purchase and security agreement includes discounts recorded as interest expense on each funding and matures on September 29, 2025.
Current wording
On September 29, 2023, our company and Nova entered into a two-year revolving purchase and security agreement with DML HC Series, LLC, or DML, which was automatically renewed for a term of one year on September 29, 2025, to sell, with recourse, Nova’s accounts receivables for a revolving financing up to a maximum advance amount of $4.5 million. Effective October 22, 2025, we entered into amendment No. 5 with DML, which extends the term of the revolving purchase and security agreement through September 28, 2028. A review is performed on a quarterly basis to assess the adequacy of the maximum amount. If mutually agreed upon by us and DML, the maximum amount may be increased. On April 24, 2024, we entered into amendment No. 1 with DML which increased the maximum advance amount to $8,000,000 and defined the discount fee equal to 2.25% per purchase and claims balance forward on new purchases with a minimum fee to now be $10,000. On June 11, 2024, we entered into amendment No. 2 with DML which further increased the maximum advance amount to $11,000,000. On December 27, 2024, we and Nova entered into amendment No. 3 with DML which further increased the maximum advance amount to $15,000,000. On October 1, 2025, we and Nova entered into amendment No. 4 with DML which further increased the maximum advance amount to $23,000,000. As of December 31, 2025, we had an outstanding balance $17,209,908 against the revolving receivable line of credit and accrued interest of $673,267. The unused line of credit balance as of December 31, 2025 was $5,790,092. The revolving purchase and security agreement includes discounts recorded as interest expense on each funding and matures on September 28, 2028.
Previous wording
The following discussion relates to critical accounting policies for our consolidated company. The preparation of financial statements in conformity with United States generally accepted accounting principles, or GAAP, requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements:
Current wording
The following discussion relates to critical accounting policies for our consolidated company. The preparation of financial statements in conformity with GAAP requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements:
Previous wording
Where appropriate, we utilize the expected value method to determine the appropriate amount for estimates of variable consideration, which has been based on a historical 12-month lookback of our actual settlement realization rates. The estimates of reserves established for variable consideration reflect current contractual requirements, our historical experience, specific known market events and trends, industry data and forecasted patient data and settlement patterns. Settlement realization patterns are assessed based on actual settlements and based on expected settlement realization trends obtained from discussions with attorneys, doctors and our third-party medical billing company. Settlement amounts are negotiated, and prolonged settlement negotiations are not indicative of a greater likelihood of reduced settlement realization or zero settlement.
Current wording
Where appropriate, we utilize the expected value method to determine the appropriate amount for estimates of variable consideration, which has been based on a historical lookback of our actual settlement realization rates. The estimates of reserves established for variable consideration reflect current contractual requirements, our historical experience, specific known market events and trends, industry data and forecasted patient data and settlement patterns. Settlement realization patterns are assessed based on actual settlements and based on expected settlement realization trends obtained from discussions with attorneys, doctors and our third-party medical billing company. Settlement amounts are negotiated, and prolonged settlement negotiations are not indicative of a greater likelihood of reduced settlement realization or zero settlement.
Previous wording
Prior to fiscal year 2024, we historically realized a 49% settlement rate from total gross billed charges. Accordingly, we had historically recognized net healthcare service revenue as 49% of gross billed amounts. During the year ended December 31, 2024, we underwent efforts to accelerate cash settlement of our accounts receivable to generate cash flow for operations. We did this by shortening our settlement negotiations with insurance companies and accepting lower settlement amounts. Additionally, during the third quarter of 2024, we completed a thorough review of our third-party billing data, including reviewing historical reports and new reporting methods as a part of our updated analysis. Based upon this review it was determined that a 24-month lookback period should be used in the analysis of our historical settlement realization rates. As a result of the new efforts to accelerate cash settlement during the year ended December 31, 2024, we realized a 44% average settlement rate of our gross billed charges during this time frame, which were historically recorded in accounts receivable and revenue at 49% of gross billings. Accordingly, we recorded reductions to net revenue of $1,005,764 for the year ended December 31, 2024. Additionally, with the reduction in our estimate of our settlement realization rate from 49% to 44%, a $1,650,474 change in accounting estimate was taken during the third quarter of 2024 in our accounts receivable and revenue.
Current wording
Prior to fiscal year 2024, we historically realized a 49% settlement rate from total gross billed charges. Accordingly, we had historically recognized net healthcare service revenue as 49% of gross billed amounts. During the year ended December 31, 2024, we underwent efforts to accelerate cash settlement of our accounts receivable to generate cash flow for operations. We did this by shortening settlement negotiations with insurance companies and accepting lower settlement amounts. Additionally, during 2024, we completed a thorough review of our third-party billing data, including reviewing historical reports and new reporting methods as a part of the updated analysis. Based upon this review, it was determined that a lookback period should be used in the analysis of our historical settlement realization rates. As a result of the new efforts to accelerate cash settlement, and establishing a periodic lookback analysis, during the year ended December 31, 2024, we realized a 44% average settlement rate of our gross billed charges during this time frame, which were historically recorded in revenue at 49% of gross billings. We continue to periodically evaluate this estimated settlement realization rate in accordance with ASC 606. This includes a monthly review of our historical data and settlement realization rates, along with estimates of current and pending settlements through ongoing discussions with attorneys, doctors and third-party medical billing company in order to determine the variable consideration under ASC 606 and the net transaction price. During 2025, we continued expanding the historical lookback period to 36 months based on the ongoing expanding data history and the timeframe in which collections have recently been occurring. We update the settlement realization rate estimate used in determining revenue periodically based on these reviews. As of December 31, 2025, the settlement realization rate at which revenue is recorded was at 41%.
Previous wording
We have contract fees for amounts earned from our Non-PIP related procedures, typically car accidents, and are settled on a contingency basis. Prior to April 2023, these cases were sold to a factor who bears the risk of economic benefit or loss. Generally, the sale of these cases to a third-party factor resulted in an approximate 54% reduction from the accounts receivables amounts. After selling patient cases to the factor, any additional funds settled by us were remitted to the factor. We evaluated the factored adjustments considering the actual factored amounts per patient on a quarterly interval, and the reductions from accounts receivable that were factored were recorded in finance charges as other expenses on the consolidated statement of operations. As a result of our 18 to 24 month settlement realization timeframe, we have an accrued liability resulting from the settlement of receivables sold to the third-party factors which fluctuates as settlements are made and remitted to those third-party factors. These accounts receivables sold to these third-party factors are not included in our financial statements accounts receivable balance once sold and therefore are not part of the assessment of the net realizable value of accounts receivable. For the year ended December 31, 2023, we factored a total of $544,196 of our accounts receivable in exchange for cash of $253,750. We ceased factoring of accounts receivable in the first quarter of 2023.
Current wording
We have contract fees for amounts earned from our Non-PIP related procedures, typically car accidents, and are settled on a contingency basis. Prior to April 2023, these cases were sold to a factor who bears the risk of economic benefit or loss. Generally, the sale of these cases to a third-party factor resulted in an approximate 54% reduction from the accounts receivables amounts. After selling patient cases to the factor, any additional funds settled by us were remitted to the factor. We evaluated the factored adjustments considering the actual factored amounts per patient on a quarterly interval, and the reductions from accounts receivable that were factored were recorded in finance charges as other expenses on the consolidated statement of operations. As a result of our 12 to 24 month settlement realization timeframe, we have an accrued liability resulting from the settlement of receivables sold to the third-party factors which fluctuates as settlements are made and remitted to those third-party factors. These accounts receivables sold to these third-party factors are not included in our financial statements accounts receivable balance once sold and therefore are not part of the assessment of the net realizable value of accounts receivable. We ceased factoring of accounts receivable in the first quarter of 2023.
Previous wording
We do not have a significant exposure to credit losses as we have historically had a less than 1.0% loss rate where we received no settlement amount for our outstanding accounts receivable. Although possible, claims resulting in zero collection upon settlement are rare based on our historical experience and has historically been 0.5% to 1.0% of our outstanding accounts receivable, thereby resulting in a collection rate of 99%. We use the loss rate method to record our allowance for credit losses. We apply the loss rate method by reviewing our zero collection history on a quarterly basis and updating our estimate of credit losses to adjust for changes in loss data. We typically collect on our accounts receivable between 18 to 24 months after recording. We do not record an allowance for credit losses based on an aging of our accounts receivable as the aging of our receivables do not influence the credit loss rate due to the nature of our business and the letter of protection. We do not adjust our receivables for the effects of a significant financing component at contract inception as the timing of variable consideration is determined by the settlement, which is outside of our control. As of December 31, 2024 and 2023, our allowance for credit losses was $255,215 and $122,190, respectively. We recognized $266,000 and $122,190 of credit loss expense during the years ended December 30, 2024 and 2023, respectively, which is included in selling, general and administrative expenses in the condensed consolidated statement of operations. The balance of accounts receivable, net as of January 1, 2023 was $6,603,920. The balance of the allowance for credit losses was $0 as of January 1, 2023.
Current wording
We do not have a significant exposure to credit losses as we have historically had a less than 1.0% loss rate where we received no settlement amount for our outstanding accounts receivable. Although possible, claims resulting in zero collection upon settlement are rare based on our historical experience and has historically been 0.5% to 1.0% of our outstanding accounts receivable, thereby resulting in a collection rate of 99%. We use the loss rate method to record our allowance for credit losses. We apply the loss rate method by reviewing our zero collection history on a quarterly basis and updating our estimate of credit losses to adjust for changes in loss data. We typically collect on our accounts receivable between 12 to 24 months after recording. We do not record an allowance for credit losses based on an aging of our accounts receivable as the aging of our receivables do not influence the credit loss rate due to the nature of our business and the letter of protection. We do not adjust our receivables for the effects of a significant financing component at contract inception as the timing of variable consideration is determined by the settlement, which is outside of our control. As of December 31, 2025 and 2024, our allowance for credit losses was $400,000 and $255,215, respectively. We recognized $262,928 and $266,000 of credit loss expense during the years ended December 31, 2025 and 2024, respectively, which is included in selling, general and administrative expenses in the consolidated statement of operations. The balance of accounts receivable, net as of January 1, 2024 was $13,305,254. The balance of the allowance for credit losses was $122,190 as of January 1, 2024.
Previous wording
Goodwill. Goodwill is not amortized but is evaluated for impairment annually or when indicators of a potential impairment are present. We review goodwill for impairment on a reporting unit basis annually and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. Goodwill is tested first for impairment based on qualitative factors on an annual basis or in between if an event occurs or circumstances change that indicate the fair value may be below its carrying amount, otherwise known as a ‘triggering event’. An assessment is made of these qualitative factors to determine whether it is more likely than not the fair value is less than the carry amount, including goodwill. The annual evaluation for impairment of goodwill, if needed, is based on valuation models that incorporate assumptions and internal projections of expected future cash flows and operating plans. We believe such assumptions are also comparable to those that would be used by other marketplace participants. For the years ended December 31, 2024 and 2023, we determined there to be no impairment. We based this decision on impairment testing of the underlying assets, expected cash flows, decreased asset value and other factors.
Current wording
Goodwill. Goodwill is not amortized but is evaluated for impairment annually or when indicators of a potential impairment are present. We review goodwill for impairment on a reporting unit basis annually and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. Goodwill is tested first for impairment based on qualitative factors on an annual basis or in between if an event occurs or circumstances change that indicate the fair value may be below its carrying amount, otherwise known as a ‘triggering event’. An assessment is made of these qualitative factors to determine whether it is more likely than not the fair value is less than the carry amount, including goodwill. The annual evaluation for impairment of goodwill, if needed, is based on valuation models that incorporate assumptions and internal projections of expected future cash flows and operating plans. We believe such assumptions are also comparable to those that would be used by other marketplace participants. For the years ended December 31, 2025 and 2024, we determined there to be no impairment. We based this decision on impairment testing of the underlying assets, expected cash flows, decreased asset value and other factors. The restatement of our previously issued consolidated financial statements, which corrects the classification of noncash interest expense in the consolidated statements of cash flows from financing activities to operating activities, did not constitute a ‘triggering event’ under our impairment assessment procedures, as it did not reflect a change in our operations, market conditions, or other circumstances that could indicate the fair value of goodwill may be below its carrying amount. Furthermore, even if a quantitative analysis had been performed, the correction would not have impacted the valuation models’ key inputs, including assumptions and internal projections of expected future cash flows and operating plans. Accordingly, the restatement had no effect on our goodwill impairment conclusion.
Previous wording
Valuation of Long-Lived Assets. In accordance with the provisions of ASC Topic 360-10-5, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets such as plant and equipment and construction in progress held and used by us are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of assets to estimated cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets.
Current wording
Valuation of Long-Lived Assets. In accordance with the provisions of ASC Topic 360-10-35, “Impairment or Disposal of Long-Lived Assets,” all long-lived assets such as plant and equipment and construction in progress held and used by us are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of assets to estimated cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. The restatement of our previously issued consolidated financial statements, which corrects the classification of noncash interest expense in the consolidated statements of cash flows from financing activities to operating activities, did not constitute an event or change in circumstances under ASC 360 that would trigger a recoverability test, and did not alter the estimated cash flows used in such an assessment.
Previous wording
***Distinguishing Liabilities from Equity.***We account for our series N senior convertible preferred stock, series R convertible preferred stock, and series X senior convertible preferred stock subject to possible redemption in accordance with ASC 480, “Distinguishing Liabilities from Equity”. Conditionally redeemable preferred shares are classified as temporary equity within our consolidated balance sheet.
Current wording
***Distinguishing Liabilities from Equity.***We account for our series N senior convertible preferred stock and series X senior convertible preferred stock subject to possible redemption in accordance with ASC 480, “Distinguishing Liabilities from Equity”. Conditionally redeemable preferred shares are classified as temporary equity within our consolidated balance sheet.
Previous wording
Stock-Based Compensation. We account for our stock-based compensation in which we obtain employee services in share-based payment transactions under the recognition and measurement principles of the fair value recognition provisions of section 718-10-30 of the FASB ASC. Pursuant to paragraph 718-10-30-6 of the FASB ASC, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur. Generally, all forms of share-based payments, including stock option grants, warrants and restricted stock grants and stock appreciation rights are measured at their fair value on the awards’ grant date, based on estimated number of awards that are ultimately expected to vest. The expense resulting from share-based payments is recorded in general and administrative expense in the consolidated statements of operations.
Current wording
Share-Based Compensation. We account for our stock-based compensation in which we obtain employee services in share-based payment transactions under the recognition and measurement principles of the fair value recognition provisions of section 718-10-30 of the FASB ASC. Pursuant to paragraph 718-10-30-6 of the FASB ASC, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of equity-classified awards is the grant date, which is the date on which we and the grantee reach a mutual understanding of the award’s key terms and conditions. Generally, all forms of share-based payments, including stock option grants, warrants, restricted stock grants and stock appreciation rights are measured at their fair value on the awards’ grant date, based on estimated number of awards that are ultimately expected to vest. The expense resulting from share-based payments is recorded in general and administrative expense in the consolidated statements of operations.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
For the year ended December 31, 2024, we realized a 44% average settlement rate of our gross billed charges during this time frame, which were historically recorded in accounts receivable and revenue at 49% of gross billings. Accordingly, we recorded reductions to net revenue of $1,005,764 for the year ended December 31, 2024. Additionally, with the reduction in our estimate of our settlement realization rate from 49% to 44%, a $1,650,474 change in accounting estimate was taken during the third quarter of 2024 in our accounts receivable and revenue. For the year ended December 31, 2025, we realized a 41% average settlement rate.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Prior to April 2023, we factored (sold) the vast majority of our accounts receivable to third party(s) to generate working capital to fund ongoing business operations and growth. For the year ended December 31, 2023, we factored a total of $544,196 of our accounts receivable in exchange for cash of $253,750. We ceased factoring of accounts receivable in the first quarter of 2023. The most recent average realization time for accounts receivable was approximately 18 to 24 months from the initial date of service. Typically, a patient will have a series of dates of service over an average of 12 to 16 months.
Previous report — wording carried elsewhere
On June 11, 2024, we entered into a settlement agreement and release of claims with the holder certain notes. Pursuant to the settlement agreement and release of claims, the holder agreed to cancel such notes in exchange for the fixed amount settlement promissory note in the principal amount of $535,000 described below. Additionally, during the year ended December 31, 2024, we exchanged certain notes for the issuance of 938,908 shares of series Y senior convertible preferred stock to the noteholder.